Questions to ask when thinking about Working Capital Finance

By David Harrison
Content writer
Last update: 19 November 20191 minute read
Questions to ask when thinking about Working Capital Finance

Table of Contents

Having issues with your business’ Working Capital? Do you wish to target the causes early before the issues get worse? A specialised finance package that helps developing SMEs overcome issues affecting their working capital is Working Capital Finance. Containing a diverse array of business finance products, each designed to benefit your business in different ways, it’s everything you need to resolve underlying issues and emerge stronger than ever. But, before deciding upon the first product to catch your attention, you also need to consider what questions to ask lenders. By asking the right questions you’ll be better positioned to source the most appropriate product at the right price and with great terms and conditions to match. To help get you started, we’ll look at which aspects of any potential deal you need to query before signing, including:

  • What is their experience in your sector?
  • What products do they offer?
  • Can you review a draft contract?
  • How much interest do they charge?
  • Are there any additional costs you should be made aware of?

What is their experience in your sector?

Choosing a lender when applying for business finance can be tricky. Ideally, you want someone who is familiar with your sector and can appreciate the challenges that you may face.

With this shared knowledge and understanding, they may even be able to point you towards other product that may offer greater benefits, depending on your current situation. But, as well as asking them directly, consider reviewing their case studies to get a strong idea of what to expect. Everyone’s experience of their services can vary, so reviewing online reviews and finance forums is a wise move, if available. Ultimately strong relationships with lenders are built upon trust, so choosing a reputable lender who sticks to their promises is a must.

Is Working Capital Finance for you? Find out more or apply today.  

What products do they offer?

Working Capital Finance offers you access to a diverse range of specialised business finance products, and so should your lender. When approaching lenders, ask them about what products they can offer that may resolve your current predicament. With Working Capital Finance you should have access to a choice of business finance products, including Bridging Loans, Invoice Finance and Merchant Cash Advance. Also, be sure to enquire about how their product works so you can tell if it will be the right fit for your business.

Can you review a draft contract?

When first approaching any lender you can ask to review a draft contract, if one is available. For you as a potential borrower, this can prove an invaluable move since it’ll allow you to gather an understanding of what to expect. With access to a draft contract, you can review it with your business advisor and identify any potential concerns regarding terms and conditions early. If you choose to use that lender, you can go into negotiations knowing what you wish to amend and where to compromise. As always, draw a bottom line that allows to you know when to walk away from a potential agreement.

How much interest do they charge?

How lenders charge interest depends on the type of product that they’re offering. Of course, interest rates can vary significantly from lender to lender, but you need to know and appreciate how it’s applied to that specific product. For loan-type products, such as Bridging Loans and Asset Refinance, interest is charged in accordance with an Annual Percentage Rate (APR) and which interest band or bracket your credit profile fits. However, some products charge differently. With Merchant Cash Advance, interest is applied using a factor rate, sometimes referred to as a multiple. As such, it’s wise to query interest rates so that you’ll know how much extra you’ll be repaying, whether it’s affordable and if another lender would be more preferable.

Are there any additional costs to be made aware of?

Another aspect to consider with any potential finance agreement is what other charges you need to be made aware of. How lenders can apply any additional costs can vary, and may be specific to certain products. Sometimes, you might be asked to pay for setup, administration, balloon payments and even exit charges. For example, when applying for a Bridging Loan or Asset Refinance agreement, you may need to pay a surveyor’s fee for them to come out and evaluate your assets. So asking about any additional charges early really is to your advantage since you can calculate the full cost of the agreement and compare it to other lenders.

Sourcing the right solution for your working capital

Tracking down the most appropriate finance agreement for your business is no simple matter. It needs to be a product that matches your business and it’s unique circumstances. But when it comes to your business’ working capital you need a product that gets to the heart of the issue and allows your business to emerge stronger than ever. That’s why Working Capital Finance is proving so popular for many SMEs. So if you’re concerned about your working capital, come and see how Working Capital Finance could help your business or expand your horizons and apply for Working Capital Financetoday.

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